Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

11. STOCK-BASED COMPENSATION

As of September 30, 2012, the Company has two active equity incentive plans under which stock awards can be issued. Under the Michael Baker Corporation Long-Term Incentive Plan approved by the Company’s shareholders in 2010 (the “Long-Term Plan”), the Company is authorized to grant stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units, performance share units and other stock-based awards for an aggregate of 500,000 shares of Common Stock to employees through April 8, 2020. Under the Long-Term Plan, outstanding restricted stock awards vest in equal annual increments over three years. Under the amended 1996 Non-employee Directors’ Stock Incentive Plan (the “Directors’ Plan”), the Company is authorized to grant options and restricted shares for an aggregate of 400,000 shares of Common Stock to non-employee board members through February 18, 2014. The options under the Directors’ Plan become fully vested on the date of grant and become exercisable six months after the date of grant. Under the Directors’ Plan, the exercise price of each option equals the average market price of the Company’s stock on the date of grant. Under the Long-Term Plan and the Directors’ Plan, the restricted shares awarded are equal to the closing price of the Company’s stock on the date of the grant. Vested options remain exercisable for a period of ten years from the grant date under the plans. From the date a restricted share award is effective, the awardee will be a shareholder and have all the rights of a shareholder, including the right to vote such shares. Restricted shares may not be sold or assigned during the restriction period commencing on the date of the award.

As of September 30, 2012 and December 31, 2011, the restrictions had not lapsed on 22,500 shares and 24,000 shares, respectively, of the Company’s restricted stock awarded under the Directors’ Plan. As of September 30, 2012 and December 31, 2011, the restrictions had not lapsed on 100,112 shares and 98,208 shares, respectively, of the Company’s restricted stock awarded under the Long-Term Plan. As of both September 30, 2012 and December 31, 2011, all outstanding options were fully vested under the Directors’ Plan. There were 100,000 and 104,000 exercisable options under the Directors’ Plan as of September 30, 2012 and December 31, 2011, respectively. Unearned compensation related to restricted stock awards was approximately $2,307,000 and $2,427,000 as of September 30, 2012 and December 31, 2011, respectively.

The following table summarizes all restricted stock issued:

				Weighted
				average
	Restricted			issuance price
	shares			per share
Balance at December 31, 2011		122,208		$	30.74
Restricted shares granted		54,637			22.97
Restricted shares vested		(54,233	)		32.46
Balance at September 30, 2012		122,612		$	26.52

Under the Long-Term Plan, participants may elect to withhold shares to satisfy their tax obligations related to vesting shares. Shares withheld are reflected as treasury share purchases in the accompanying unaudited Condensed Consolidated Balance Sheets. The Company purchased 11,611 and 3,648 shares aggregating to $272,000 and $86,000 due to these elections for the nine months ended September 30, 2012 and 2011, respectively.

The following table summarizes all stock options outstanding:

								Weighted
				Weighted				average
	Shares			average		Aggregate		contractual
	subject			exercise price		intrinsic		remaining life
	to option			per share		value		in years
Balance at December 31, 2011		104,000		$	28.57	$	126,570		6.2
Granted		16,000			22.95
Exercised		(4,000	)		15.04
Balance at September 30, 2012		116,000		$	28.27	$	232,070		6.2

As of September 30, 2012, 321,633 shares were available for future grants under the Long-Term Plan and 47,000 shares were available for future grants under the Directors’ Plan.

The following table summarizes information about stock options outstanding as of September 30, 2012:

	Options outstanding						Options exercisable
					Weighted				Weighted
	Number				average		Number		average
	of		Average		exercise		of		exercise
Range of exercise prices	options		life (1)		price		options		price
$8.52 - $8.55		6,000		0.6	$	8.55		6,000	$	8.55
$10.025 - $15.625		6,000		1.6		12.63		6,000		12.63
$20.16 - $26.86		56,000		6.6		23.37		40,000		23.53
$37.225 - $40.455		48,000		6.0		38.40		48,000		38.40
Total		116,000		5.8	$	28.27		100,000	$	29.12

⁽¹⁾ Average life remaining in years.

In June 2011, 40,000 SARs issued in connection with the Company’s Chief Executive Officer’s employment agreement were vested and redeemed for 3,957 shares of the Company’s common stock made available under the Long-Term Plan. The fair value of the SARs was estimated using a Black-Scholes option pricing model.

In April 2010, the Company’s Board of Directors adopted the Michael Baker Corporation Employee Stock Purchase Plan (the “ESPP”). The first day of each quarter is an offering date and the last day of each quarter is a purchase date. The first purchase period began on January 1, 2011. Employees are able to purchase shares of Common Stock under the ESPP at 90% of the fair market value of the Common Stock on the purchase date. The Company issued 34,072 and 39,737 shares under the ESPP for the nine months ended September 30, 2012 and 2011, respectively. The maximum number of shares of Common Stock which may be issued pursuant to the ESPP is 750,000 shares. As of September 30, 2012, 661,855 shares were available for future purchases under the ESPP.

The Company recognized total stock-based compensation expense under the caption “Selling, general and administrative expenses” in the unaudited Condensed Consolidated Statement of Comprehensive Income related to its restricted stock, options, SARs, and ESPP for the three and nine months ended September 30, 2012 of $0.5 million and $1.7 million, respectively, and for the three and nine months ended September 30, 2011 of $0.4 million and $1.9 million, respectively.